UPDATE: Department of Labor's LMRDA Proposal has Broad Implications for HR Departments and In-House Counsel

By Allen Kinzer and Nelson Cary

Recently, we alerted you to the U.S. Department of Labor’s effort to change the reporting requirements for businesses who engage external advisors in connection with union organizing issues. As we continue to review these proposed regulations, their scope becomes even more problematic for employers. 

For example, suppose you are a human resources professional or an in-house counsel for XYZ, Inc. In your role, you provide employee relations or labor and employment legal services to XYZ, Inc. and XYZ’s corporate affiliate, AB, LLC. These services are provided under a formal or informal agreement, and there is an accounting transfer of expenses from AB to XYZ for these services. Under the DOL’s new proposal, both AB and XYZ could be required to file reports about these services and the amounts charged for them.

At issue is Section 203 of the Labor-Management Reporting and Disclosure Act (LMRDA). It requires, among other things, that employers file reports with the DOL when they enter into an agreement with a consultant or contractor to persuade employees about unions. The DOL proposes to interpret Section 203 to require reporting when the contractor engages in “persuader activity,” which the DOL proposes to define as:

providing material or communications to, or engaging in other actions, conduct, or communications on behalf of an employer that, in whole or in part, have the object directly or indirectly to persuade employees concerning their rights to organize or bargain collectively. 

The DOL’s examples of “persuader activity” include:

  • Developing employer personnel policies or practices designed to persuade employees; and
  • Training supervisors or employer representatives to conduct individual or group meetings designed to persuade employees.

In our hypothetical, suppose XYZ’s in-house lawyer or HR professional drafts or revises an “open door” or complaint policy for AB’s employee handbook. Persuader activity? Or, XYZ’s in-house lawyer or HR professional trains AB’s supervisors on the Do’s and Don’ts of how to respond to questions from employees regarding unions. Persuader activity? Or, XYZ’s in-house lawyer or HR professional trains AB’s supervisors on how to respond to harassment complaints and how to properly and fairly discipline employees. Persuader activity?

Here’s the DOL’s guidance in its proposed interpretation: Does each activity directly or indirectly have the object of persuading employees concerning their rights to union representation? If yes, then the DOL’s proposal requires both XYZ and AB to report the arrangement between them and annually report the accounting transfers from AB to XYZ. The forms are the LM-10 for AB and the LM-20 and LM-21 for XYZ.

Given the intrusive scope of these rules, one would think the regulation would have elicited more comments. As of July 13, however, only 34 comments have been filed.  We anticipate that some of the major, business-oriented groups, like the U.S. Chamber of Commerce, will ultimately submit written comments.  The deadline for submission of formal comments to the DOL is August 22, 2011.  We will continue to monitor those submissions and update this blog with new developments.

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